User:Norbert Knoll-Dornhoff/Global Loans of European Investment Bank for Small and Medium Enterprises in Asian Countries

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== Project Financing of Small and Medium Enterprises Global South Lending of ==

EIB – European Investment Bank

by Norbert W. Knoll-Dornhoff, Permanent Representative WASME World Association for Small and Medium Enterprises in Vienna

I. Introduction

1. The European Investment Bank as International Financial Institution (IFI) In the five decades from foundation, the European Investment Bank (EIB) has become one of the most powerful International Financial Institutions in the world. Operating on behalf the EU Governments who are the owners, the EIB lends about 45 billion EURO a year for projects helping development and cohesion of the European Union. In the 1960’s the EIB started to finance projects in Africa and today about 10% of the EIB’s financing is outside Europe, in Countries from China to Brazil. This lending covers a wide spectrum of project investments including energy, water, communication, Industry, Small and Medium Enterprises (SMEs) and financial intermediaries.

2. Global South Lending

In recent decades, the EIB has become an important player among International Financial Institutions (IFIs) lending to Countries in the Global South. The EIB is increasingly involved in lending operations outside the European Union, in particular in the Private Sector. Of all IFI lending in Latin America from 1979 to 2005, the EIB’s Private Sector Support ranked second after the World Bank. It was ranked the fourth largest IFI Private Sector Lender in Asia. 3. Contents and aims of the Report This Report contains the following information:

3.1. Contents a) EIB’s SMEs Investment Support b) Lending in Asia and Latin America c) Overlook Financial Instruments offered by EIB d) Global Loan Facility e) European Investment Fund – Venture Capital and Guarantees f) Global Loans and Guarantees for SME within EIB’s South Lending g) EIB Authorised Financial Institutions for South Lending programmes 3.2 Conclusions and Recommendations for actions a) Conclusions b) Recommendations for actions • WASME Headquarters • Permanent Mission WASME to UNIDO 3.3 ANNEX „A” - Global Loans for SME 2000 – 2007 under appraisal, approved, signed. “B” - EIB Funding - breakdown by regions and countries “C” - Cotonou Agreement “D” – EIB authorised Financial Institutions

II. EIB’s SMEs Investment Support

1. Supporting investment by Small and Medium sized Enterprises (SMEs) is a key focus for the EIB’s operational activities. The EIB Group’s range of financing instruments meet the many needs of SMEs. The Group supports SME investment indirectly through credit arrangements with local intermediary banks and financing institutions. Requests for financing under these credit lines should be addressed directly to the financial intermediaries with whom the EIB has concluded such agreements. The most widely available EIB Group facilities to support SMEs are: • EIB lines of credit for SMEs arranged with local banks • EIF venture capital activities • EIF SME portfolio guarantees • JEREMIE - Joint European Resources for Micro to Medium Enterprises 2. The EIB - a development partner for SMEs outside the European Union a) The European Investment Bank is the European Union’s long term financing arm. While most of its operations are in the EU, it also contributes to the EU’s development aid and co-operation policies in other regions and countries. The Bank is project-oriented, financing mainly the fixed-asset components of capital investments. Such projects have to be technically sound, financially viable, show an acceptable economic return and comply with environmental protection, procurement regulations and prevailing social legislation and norms. These criteria apply to all projects financed by the Bank, both within and outside the EU. The EIB has been a development partner, supporting projects in developing and emerging countries, notably in the African, Caribbean and Pacific states (ACPs), for more than 40 years. Over these years, it has acquired an extensive knowledge of the countries in which it works, their investment climate and the reality of operating in them. b) In particular, the Bank supports EU co-operation policies through: • a wide range of financial products (loans, equity, guarantees or quasi-equity instruments); • financing sound and productive investments mainly in sectors that generate revenues for the products and services provided. The Bank’s expertise and comparative advantage lie, in particular, in fields such as infrastructure, environment and Small and Medium-sized Enterprises (SMEs), where it seeks to pass to project promoters its technical and economic know-how. Other benefits of EIB operations in developing countries are related to the Bank offering very long maturities at interest rates closely following its borrowing on capital markets or an extended range of flexible risk bearing financial instruments. This offers -4- particular advantages to borrowers in countries suffering from scarcity of long-term funding on the local capital markets and limited access to international capital markets. c) Poverty reduction Sustained high levels of economic growth are essential for poverty reduction. Meeting basic social needs through grant funding is indispensable to help populations survive. However, economic growth is required to break the vicious circle of poverty. The EIB, being a bank, provides the financial resources required to promote the investments that will generate growth, thereby contributing to sustainable poverty reduction and social improvement. The above is reflected in the various mandates under which the Bank operates in emerging and developing countries: d) African, Caribbean and Pacific states: Private sector development is considered as essential for economic growth. This is a central objective of the Cotonou Partnership Agreement between the EU and the ACP states, and under which the EIB operates in the region. The Cotonou Agreement has established the Investment Facility (IF), a revolving fund aimed at being financially sustainable whilst meeting the development objectives of the Agreement. It is managed and operated by the EIB and is focused on supporting private sector development. “The prime objective of the IF is to further the Cotonou Agreement’s goal of reducing poverty in the ACPs, by contributing to sustained economic growth, private sector development, increased employment and improved access to productive resources. It aims to operate in all sectors and to support investments by private enterprises and commercially run public sector entities, including revenue-generating infrastructure critical for the private sector” (Annex II, Chapter 1, Article 3, par. 1 of the Cotonou Agreement).” e) Asia and Latin America (ALA) In line with the EU Council Decision on the ALA mandate EIB finance is targeted at productive investment that contributes to economic development and growth and supports projects of mutual interest for the recipient countries and the EU. Projects in the ALA regions therefore involve a reciprocal flow of benefits between the EU and one or more beneficiary countries.

III. Lending in Asia and Latin America

1. EIB lending in Asia and Latin America (ALA) started in 1993 and is governed by mandates from the European Union (EU). Under the current mandate (ALA IV), covering the period the 2007-2013, the EIB is authorised to lend up to EUR 3.8 billion for financing operations supporting the EU co-operation strategies in these regions and complementing other EU development and cooperation programmes and instruments in these regions. The EUR 3.8 billion regional ceiling is broken down into indicative sub-ceilings of EUR 2.8 billion for Latin America and EUR 1.0 billion for Asia. There are no amounts allocated per country. The countries currently eligible for EIB financing under the ALA IV mandate are: 2. Asia Brunei, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam - ASEAN Group Bangladesh, China, India, Mongolia, Nepal, Pakistan, South Korea, Sri Lanka, Yemen. 3. Latin America • Bolivia, Colombia, Ecuador, Peru, Venezuela - Andean Community • Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua - Central American Common Market • Argentina, Brazil, Paraguay, Uruguay - MERCOSUR • Chile, Mexico, Panama 4. Types of projects The EIB can support viable public and private sector projects in infrastructure, industry, ago-industry, mining and services. Special emphasis is given to projects that contribute to environmental sustainability (including climate change mitigation) and to the security of the EU energy supply. The other core sector of activity will be to support the EU presence in those regions through Foreign Direct Investment, transfer of technology and know-how. EIB loans are project-oriented and linked to the financing of the fixed-asset components of an investment. a) Projects with a total investment above EUR 25 million can be financed either directly to a project promoter or indirectly through a government or financial intermediary. Project promoters are required simply to provide the Bank’s Operations Directorate with a detailed description of their capital investment together with the prospective financing arrangements. The total investment of a typical project under the ALA III mandate is above EUR 40 million.

b) For smaller projects the EIB can lend through credit lines to selected financial institutions, which then on-lend the funds mainly to small and medium-sized enterprises (Smells). The financial institutions assess each project, assume the credit risk and set the loan conditions for the final beneficiary according to criteria agreed with the EIB. Interested promoters of such projects should contact the banks and intermediaries directly. c) EIB does not provide grants or subsidies for projects in Asia and Latin America. -7- == IV. Financial Instruments offered by EIB ==

1. Financing facilities (overlook) The EIB offers various financial services to support projects, depending on eligibility and project category. 1.1 Individual loans Requests for individual loans can be addressed directly to the EIB, without specific formalities, either to its headquarters in Luxembourg, or to one of its external offices (EIB addresses). 1.2 Credit Lines (so-called EIB Global Loans) Small and medium sized investments are supported via credit lines arranged with national, regional and local banks. Financing requests should be addressed directly to one of the FI. 1.3 Venture capital Requests for venture capital should be addressed directly to an intermediary. See www.eif.org to obtain the list. 2. Structured Finance Facility (SFF) 3. Credit Lines (so-called EIB Global Loans) These credit lines are made available to banks, leasing companies or financial institutions, which online the proceeds for small or medium-scale investment projects meeting the Bank’s criteria. 3.1 Who can benefit from the proceeds of these credit lines? authorities or Smells. To qualify as an SME, a company must have fewer than 250 employees; an annual turnover not exceeding EUR 50 million; and an annual balance sheet total of up to EUR 43 million. 3.2 For what projects? New capital investment projects worth up to EUR 25 million, undertaken by SMEs or, in the case of small infrastructure projects, by local authorities. 3.3 What type of investment? Corporate investment, especially by small and medium-sized industrial and service companies, investment in advanced technologies, R&D projects, rational use of energy, environmental protection, water supply and sanitation projects, other infrastructure projects, particularly in regional development areas.

3.4 For what amount? A maximum of EUR 12.5 million and up to 50% of the investment costs. 3.5 Loan period, interest rates, repayment, currencies, guarantees, provisions/fees: Determined by the respective EIB partner bank. Maturities typically range between 5 and 12 years. Lending decisions under these schemes remain with the financial intermediaries. 3.6 How to apply? Directly to one of the intermediary banks and financing institutions, which operate on a national, regional or local level. 4. Conditions of EIB Lending a) The EIB provides long-term loans, running from approximately 4 to 20 years (possibly more), depending on the economic life of the assets to be financed. As well as fixed interest rates, the Bank can offer revisable fixed and convertible rates, allowing for the change of interest rate formula during the life of the loan at predetermined dates or periods. EIB variable rate loans are usually available at a spread below LIBOR, fixed for the full maturity of the loan at the time of each draw down. b) In addition to its usually advantageous lending rates, the EIB normally charges neither commitment fees nor non-utilisation fees, but fees for a project’s appraisal and required legal services may be applicable in certain cases. The EIB seeks adequate security for its lending, such as that provided by a bank or banking syndicate, a financial institution, or a large diversified parent company with a good credit rating. In certain circumstances, the Bank may also include a risk margin in the financing arrangements. The EIB seeks assurances that no other creditor is in a more favourable position than itself, taking into account the tenor and expected amount of the commitment. The EIB monitors the project’s progress, and may carry out onsite inspection. It may also prepare an end of project evaluation report. c) How long does the loan procedure take approximately from application to disbursement? An EIB appraisal procedure can take any period of time between 6 weeks to 18 months depending on the project scope, the degree of complication of an operation, and the efficiency of the appraisal process on the part of both the EIB and the project promoter.

d) What are the EIB disbursement procedures? An EIB loan facility, once approved by the Board of Directors, can be drawn down in a number of instalments, according to the borrower’s requirements. Typically, an EIB facility is available for use over a two to three year period. Disbursements would be usually at short notice, 10 to 15 days following each disbursement request. The maturity, repayment terms and amortisation profile of each draw down instalment can be chosen by the borrower at the time of disbursement, facilitating active treasury management. Decisions on timing and choice of currencies, maturities and interest rate formulae are kept open and decided upon at the time of each disbursement request. As such, an EIB facility resembles an MTN programme without set-up costs. 5. European Investment Fund – Venture Capital and Guarantees Since 1997, the EIB has been deploying throughout the European Union a venture capital facility designed to strengthen the equity base of high-technology SMEs and those with strong growth potential. Operations under this heading encompass financing for: a) venture capital funds, b) security packages for such funds, c) conditional and subordinated loans. They are being mounted in close co-operation with the banking and financial communities in the Member States. On 7 December 2000, the EIB and the European Investment Fund (EIF) signed a Master Agreement strengthening the relations between the two institutions in general and streamlining the type of operations offered by each institution (see EIB Group). An important point of this agreement concerns the transfer of the management of all existing EIB risk capital investments to the EIF. The EIF will be the only point of contact for all venture capital and SME portfolio guarantee transactions within the EIB group. Consult www.eif.org to find the list of intermediaries.

6. Global Loans and Guarantees within EIB’s South Lending 6.1 Break down over all regions EIB FINANCING Region Current year Past 5 years (in EUR) (in EUR) European Union 9,774,129,601 198,426,374,651 Article 18 0 1,054,587,326 South-East Europe 541,313,307 6,974,537,829 Africa, Caribbean, Pacific countries + OCT Mediterranean countries 0 South Africa 25,000,000 635,000,000 Asia and Latin & Central America 0 1,994,180,969 Commonwealth of Independent States 0 85,000,000 Total Amount 10,433,947,961 218,253,907,761 Last update : 15/05/2007 Source: EIB website: http://www.eib.europa.eu 6.2 Break down over ALA – Countries (Asia-, Latin,- Central,- America) In the past six (6) years, including the current year 2007, the following ALA Countries received no financing from EIB: a) Asia: Bangladesh, Korea Republic of, Malaysia, Nepal, Singapore, Thailand. c) Latin and Central America: Argentina, Bolivia, Chile, Costa Rica, El Salvador, Guatemala, Macau, Nicaragua, Paraguay, Regional-Latin America, Uruguay, Venezuela, West Indies, Yemen. -11- The following ALA - Countries received in the last 6 years financing from EIB: Andean Countries EUR 40,000.000,- Brazil EUR 463,000.000,- Central America EUR 65,590.355,- China EUR 500,000.000,- Colombia EUR 100,000.000,- Ecuador EUR 40,000.000,- Honduras EUR 20,000.000,- India EUR 50,000.000,- Indonesia EUR 99,539.284,- Lao, People’s Dem.Rep. EUR 42,119.773,- Maldives EUR 50,000,000,- Mexico EUR 70,000.000,- Pakistan EUR 78,603,382,- Panama EUR 40,812.995,- Peru EUR 40,000.000,- Philippines EUR 65,591,000,- Sri Lanka EUR 160,000.000,- Vietnam EUR 68,000.000,- Source: EIB, website: http://www.eib.europa.eu/ 7. Global Loans and Guarantees for SME Financing – South Lending Summary 2001 – 2007 Subject a) Global Authorisation for Microfinance 2001 Date of Entry Beneficiary 06/08/2001 Microfinance institutions and specialised funds or banks, to be selected. Location ACP States - Africa, Caribbean, Pacific countries + OCT. Description Global Authorisation for decisions on small requests – up to 2 M EUR EIB finance EUR 15 million, to be committed until July 2004. Status Approved - 24/07/2001 Subject b) BNDES Global Loan Date of Entry 14/07/2004 Beneficiary Banco Nacional de Desenvolvimento Econômico e Social (BNDES). Location Brazil - Asia and Latin & Central America. Description The proposed line of credit will be targeted to part-finance projects undertaken by private sector companies with EU interests (subsidiaries, joint ventures) EIB finance USD 50 m (equivalent to approx. EUR 41 m). Status Approved - 20/07/2004

Subject c) BGFIBANK - Support to the Gabonese financial sector Date of Entry 08/09/2004 Beneficiary BGFIBANK Location Gabon - Africa, Caribbean, Pacific countries + OCT. Description The loan will serve to strengthen BGFIBANK’s quasi-equity with the aim of assisting the development of the group’s Gabonese subsidiaries: BGFIBAIL (property and equipment leasing) and FINATRA (individual equipment loans). EIB finance EUR 6 million. Status Approved - 14/09/2004 Subject d) COFIDES Global Guarantee Framework Loan Date of Entry 09/11/2004 Beneficiary Compañia Española de Financiación del Desarrollo, COFIDES, S.A. Location ALA Countries - Asia and Latin & Central America. Description The proposed loan will be targeted to finance small and mediumsized projects undertaken by private companies with EU interests EIB finance EUR 25 m. Status Approved - 10/05/2005 Subject e) DFCC Global Loan II Date of Entry 29/03/2006 Beneficiary Ministry of Finance & Planning of the Democratic Socialist Republic of Sri Lanka Location Sri Lanka - Asia and Latin & Central America. Description Financing of investments of small/medium scale by the DFCC in industry, productive infrastructure, tourism, mining, related services and eligible health and climate change mitigation projects. EIB finance Up to EUR 50 million. Status Signed - 22/12/2006 Subject f) Access Microfinance Holding Date of Entry 02/05/2006 Beneficiary LFS Financial Systems GmbH. Linienstr. 126 D-10115 Berlin. For the attention of: Dr. Bernd Zattler, Managing Director Location ACP States - Africa, Caribbean, Pacific countries + OCT. Description Equity investment in regional holding company with a total share capital of EUR 20 million incorporated in Germany, and dedicated to the creation and acquisition of commercially sustainable microfinance institutions (MFIs). EIB finance Up to EUR 4 million. Status Under appraisal - 02/05/2006

Subject g) Investisseurs & Partenaires Date of Entry 09/05/2006 Beneficiary Investisseur & Partenaire pour le Développement Mr. Patrice Hoppenot, President of the Board c/o I&P Etudes et Conseils, 3, rue Casteja, 92100 Boulogne Billancourt, France Location ACP States - Africa, Caribbean, Pacific countries + OCT Description Equity investment in regional holding company with a total share capital of EUR 16 million incorporated in Mauritius. EIB finance Up to EUR 3.25 million Status Under appraisal - 09/05/2006 Subject h) Rwanda Global Loan II - Private Sector Support Date of Entry 19/10/2006 Beneficiary • Banque Rwandaise De Développement (Contact person : Mr. Théogène Turatsinze ; Fax No : 250 – 573569) • Banque Commerciale du Rwanda ( Contact Person : Mr. David Kuwana ; Fax No : 250 – 593395) Location Rwanda - Africa, Caribbean, Pacific countries + OCT. Description Line of Credit for on-lending in the form of medium and long-term financing in Euros and local currency. Financing of Rwandan companies, particularly Small and Medium sized, and micro enterprises. EIB finance EUR 10 million. Status Signed - 21/12/2006 Subject i) First Bank of Nigeria Date of Entry 06/11/2006 Beneficiary First Bank of Nigeria (FBN) Location Nigeria - Africa, Caribbean, Pacific countries + OCT. Description Despite improvements in the Nigerian economic environment over the last couple of years, local banks continue to experience constraints in their access to long term resources. This operation will give FBN access to a source of stable long-term finance in hard currency, which it needs to implement its ambitious strategies. It will also contribute as a catalyst to increasing the flow of long-term private funding into the banking sector. EIB finance Up to EUR 50 million. Status Signed - 05/12/2006

Subject j) Framework guarantee agreement (Central Africa) Date of Entry 06/11/2006 Beneficiary • BGFIBANK SA, Libreville, Gabon Mr Bernard PEDEPRAT, Deputy Managing Director • BICIG SA, Libreville, Gabon Mr Jean-Michel PAPIN, Director of Corporate Customers Network • Union Gabonaise de Banque SA, Libreville, Gabon Mr François HOFFMANN, Managing Director Location Regional - Central Africa - Africa, Caribbean, Pacific countries + OCT. Description Partial guarantee for loans granted by the financial intermediaries to private or public commercial enterprises. EIB finance EUR 50 million. Status Approved - 21/11/2006 Subject k) Pacific Islands Financing Facility II (PIFF II) Date of Entry 13/11/2006 Beneficiary Funds under the proposed facility would initially be made available to Bank South Pacific (BSP) in Papua New Guinea, Bank of the Cook Islands Limited (BCIL) in the Cook Islands, National Development Bank of Palau (NDBP) in the Republic of Palau and Niue Development Bank (NDB) in Niue. Additional intermediaries from other Pacific countries will be able to benefit from the facility at a later stage, subject to satisfactory appraisal and approval by the Management Committee. Location Regional - Pacific - Africa, Caribbean, Pacific countries + OCT. Description The objective of this second financing facility in the Pacific region is to provide global loans for onlending to SMEs and micro-sized initiatives as well as technical assistance to in different Pacific countries through selected financial intermediaries. EIB finance EUR 25 million Status Signed - 05/12/2006 Subject l) TVCabo Multimedia Date of Entry 17/11/2006 Beneficiary TVCabo Angola Location Angola - Africa, Caribbean, Pacific countries + OCT. Luanda Description The project concerns the construction of a broadband and bidirectional digital network. EIB finance EUR 15million. Status Approved - 06/02/2007

Subject m) Private Enterprise Finance Facility Date of Entry 05/12/2006 Beneficiary Barclays Bank of Kenya Ltd., East African Development Bank, FINA Bank Ltd. Location Kenya - Africa, Caribbean, Pacific countries + OCT. Description Credit line providing long-term funds in Shillings and foreign currencies to selected intermediary banks to finance small and medium sized private investment projects. EIB finance Up to EUR 20 million. Status Approved - 12/12/2006 Subject n) I & P Capital Fund II Date of Entry 19/12/2006 Beneficiary I&P Management (Indian Ocean) 6th floor, Harbour Front building, President John Kennedy Street Port-Louis, Mauritius Location Regional - Indian Ocean - Africa, Caribbean, Pacific countries + OCT Description The fund will make equity and quasi-equity investments of EUR 1 million – 5 million in private companies located primarily in Mauritius and Madagascar and possibly the wider Indian Ocean region and East Africa. EIB finance Up to EUR 5 million. Status Under appraisal - 19/12/2006 Subject o) PRO-PME II Global Loan Date of Entry 19/12/2006 Beneficiary PRO-PME Financement S.A. Credit institution specialising in financing of small and very small firms in Cameroon (meso finance). Location Cameroon - Africa, Caribbean, Pacific countries + OCT. Description The Bank’s loan will finance PRO-PME’s loans and leasing operations in favour of the final beneficiaries. The proposed operation complies with the principles and aims of the Investment Facility established under the Cotonou Agreement. It will help to promote Cameroon’s private sector, particularly small urban companies, which make a substantial contribution to the country’s economic development, and will assist the local financial sector by providing resources tailored to local investment requirements in terms of duration and cost. EIB finance EUR 4 million. Status Under appraisal - 19/12/2006

Subject p) MicroCred Date of Entry 19/12/2006 Beneficiary MicroCred Attn.: Mr Arnaud Ventura, Managing Director & CEO 13 rue Dieumegard 93400 Saint-Ouen France Location Regional - Africa - Africa, Caribbean, Pacific countries + OCT. Description Equity investment in a regional fund incorporated in France dedicated to the creation and acquisition of commercially sustainable microfinance institutions (MFIs). EIB finance Up to EUR 3 million from ACP-Investment Facility resources Status Signed - 02/03/2007 Subject q) Private Enterprise Finance Facility Date of Entry 08/02/2007 Beneficiary Allied Bank International (ABI), Barclays Bank of Uganda (BBU), Crane Bank, Diamond Trust Bank Uganda (DTBU), East African Development Bank (EADB), DFCU Ltd., Nile Bank Location Uganda - Africa, Caribbean, Pacific countries + OCT. Description Credit line providing long-term funds in Shillings and foreign currencies to selected intermediary banks to finance small and medium sized private investment projects; guarantee window for credit risk sharing on selected sub-borrowers. The purpose is to support investment projects for the expansion, diversification, modernisation or start-up of enterprises, through financing loans and leasing transactions with a maturity matching the economic lifetime of assets. The credit line addresses the lack of long-term resources in the Ugandan financial markets. EIB finance Up to EUR 30 million. Status Approved - 08/02/2007 Subject r) Rural Impulse Microfinance Fund Date of Entry 23/04/2007 Beneficiary Incofin M. Loïc De Cannière, Managing Director Sneeuwbeslaan 20, 2610 Wilrijk, Belgium Location ACP States - Africa, Caribbean, Pacific countries + OCT. Description A microfinance fund to be incorporated in Luxembourg with an objective to make debt and/or equity investments in microfinance institutions which provide financial services to the rural poor. EIB finance USD 85 million. Status Under appraisal - 14/05/2007

Subject s) EIB / Capital Investment Line III Date of Entry 15/05/2007 Beneficiary African Banking Corporation Zambia Limited Barclays Bank of Zambia Limited Finance Bank Zambia Limited Investrust Bank Limited Stanbic Bank Zambia Limited Standard Chartered Bank Zambia PLC Location Zambia - Africa, Caribbean, Pacific countries + OCT. Description A credit line to selected commercial banks and leasing companies for medium-term on-lending / leasing to a wide range of small and medium sized enterprises in Zambia. EIB finance EUR 40 million Status Under appraisal - 15/05/2007 8. EIB Authorised Financial Institutions for South Lending programmes A list of these Financial Institutions is contained in ANNEX “D” to this Report.

V. Conclusions and Recommendations for Actions 1. Conclusions 1.1 Not enough Global Loans for SMEs Many of the loans went to large-scale, non-sustainable oil, gas, mining, dam and industrial projects – sectors that may be economically viable for the EIB but mainly benefit subsidiaries of EU companies. Only a small fraction of the EIB budget went to SMEs. EIB Lending Asia by Sector (1994 bis 2004) Source: “The development impact of European Investment Bank (EIB) lending operations in the Cotonou and ALA framework.” (Project no.EP/ExPol/B/2004/09/06). 1.2 EIB’s key objectives regarding poverty alleviation and social development not yet reached. Although the EIB is often presented as the “Development Bank of the EU” in practice EIB’s contribution to key objectives regarding poverty alleviation and social development embedded in the EU’s Country Strategy Papers could significantly be increased within the next decade. • In Latin America and Asia EIB loans have targeted well-established and financially secure sectors or clients, thus tending not to reach out to the poorest (and financially risky) countries or small local companies. • In Latin America, more than 90% of EIB loans since 1993 have been given to either subsidiaries of Eubased companies or to big trans-national corporations. • In Africa the EIB manages a significant share of EU commission budget money for development co-operation (up to €13.5 billion during last ten years) and this tendency is increasing with the creation of the new EIB’s Cotonou Investment EIB Lending Asia

TeleComm 5%, Industry 14%, Energy 52%,Global Loan1s 6%, Transport 13%,

• Facility, expected to disburse €2.2 billion of the EU budget between 2003 and 2008. The first few loans disbursed by the Facility went predominantly to the private sector, to large European corporations or large local companies, • In Africa, as in Latin America, the preferred targets of EIB loans are within the extractive industries sector. The Chad–Cameroon Oil Pipeline was the project ever funded by the EIB in Africa, with €144 million, representing four percent of the total lending in the ACP region countries. 1.3 Better project information for NGOs and the right to submit applications for SME funding. In cases where EIB is the sole financier, more information during the whole project cycle should be made available to local and international NGOs. In accordance with the key objectives of EIB as the „Development Bank of the EU”, NGOs representing SMEs should have the right to submit funding requests directly to EIB. 1.4 Urgent Backlog: EIB Global Loans for SME in Asian Countries. • Over last ten years the EIB, acting under the first two mandates given by the EU for the ALA region (Asia and Latin America) has financed nine projects in the water sector (water supply and sanitation, sewerage systems and large dams). This has run to a total of €335 million, of which €240 million was loaned for five water projects in Asia (in China, Madagascar, Laos, Indonesia and the Philippines) and €95 million for the above- mentioned projects in Latin America (Argentina and Paraguay). Although, relative to the energy sector, the water sector in Asia was not heavily funded (only with 14% of the loans between 1994 and 2004), it is important to point out that the EU (via the use of the guarantee on EIB loans) has mainly promoted water privatisation projects in this region. These projects were carried out in the Philippines and Indonesia. • Of 19 EIB Global Loans (GL) between 2001 and 2007 ( 6 GL under appraisal, 8 GL approved and 5 GL signed), which have a direct link to Small and Medium Enterprises (SMEs) 16 GL are (or will be) provided for African Countries and Caribbean 1 GL are (or will be) provided for Latin Amertican Countries 2 GL are (or will be provided for Asian Countries.

EIB GLOBAL LOANS FOR SMEs

AFRICA LATIN AM ASIA

• Of 17 Asian Countries, only in 4 Countries are EIB authorises Financial Institutions (FI) appointed. • In the following Asian Countries are Fis appointed by EIB: India, Indonesia, Philippines, Sri Lanka. • Of a total budget of approx. 2 billion EUR (last 5 years) for the ALA Countries, only 125 million EUR have been provided for direct SME financing. 2. Recommendations for Actions 2.1 WASME Headquarters The Governing Body WASME may wish a) to discuss the contents of this Report in one of the next sessions of the Governing Body, b) to forward this Report to the WASME Member Organisations seeking their comments and possible proposals for amendments, c) to authorise the Permanent Representative WASME to submit this Report to EIB European Investment Bank to EIB’s officers in charge of Global South Lending to their consideration, d) to authorise the Permanent Mission WASME to UNIDO to seek the support of UNIDO in upgrading EIB’s Global South Lending in the ALA Countries. 2.2 PERMANENT MISSION WASME TO UNIDO The Permanent Mission WASME to UNIDO with the consent of the Governing Body WASME shall contact WASME Member Organisations, WASME Representatives, Advisers, Chambers of Commerce, Financial Institutions in the ALA Countries with priority in Bangladesh, Malaysia, Nepal, South Korea, Thailand and Vietnam in order to encourage these organisations to undertake the following actions: a) submit to the Permanent Mission WASME to UNIDO a Report on the financial needs of SMEs in their Country, b) Nominate Financial Institutions who may be interested in qualifying as a national Financial Institution under the authorisation of EIB, c) Call SMEs in their Countries to submit project proposals to be financed by EIB.

Sources:

1. EIB website http://www.eib.europa.eu 2. Investment Bank (EIB) lending operations in the Cotonou and ALA framework” (Project no EP/ExPol/B/2004/09/06), by Jaroslava Colajacomo, CRBM March 2005 available at: http://aa.ecn.cz/img_upload/2a47e698cb07569dfd0ebe077b6aa d99/eib_study12_05_jaro.pdf The study has been used as background for the European Parliament “Report on the impact of the lending activities of the European Community in developing countries (2004/2213(INI))” FINAL A6-0183/2005 9.6.2005 Committee on Development Rapporteur: Gabriele Zimmer available at: http://bankwatch.ecn.cz/newsroom/documents.shtml?x=330478